THE Philippines’ balance of payments (BOP) turned negative in 2016 from a huge surplus recorded in 2015, and failed to hit the central bank target last year.
A private think tank attributed the BOP’s negative position to the impact of trade deficit in the current account.
“The ballooning goods trade deficit has made a significant dent on the current account throughout 2016,” said Eugenia Victorino, research economist at ANZ.
One of the main components of the BOP, the current account consists of transactions in goods, services, primary income and secondary income, and measures the net transfer of real resources between the domestic economy and the rest of the world.
The BOP incurred a $420 million deficit for the whole of 2016, a turnaround from the $2.61 billion surplus a year earlier, data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday n showed.
The central bank projected a $500-million BOP surplus for 2016, taking into account a lower-than-expected excess in the first nine months and the International Monetary Fund’s (IMF) downward revision to its global growth estimate and further interest rate hikes in the US this year.
In December alone, the BOP yielded a narrower deficit of $214 million from a gap of $1.67 billion a month earlier but still a reversal of the $481 surplus during the same month in 2015. The central bank did not explain BOP position swung to a deficit.
Balance of trade
Latest current account data showed that in the first nine months of 2016, the BOP component stood at a $1.6 billion surplus, lower than the $6.2 billion posted a year earlier, primarily from a wider deficit in the trade-in-
Risks are rising that the trade deficit will likely balance out with the remittances this year. Victorino noted.
“The crucial factor will be the growth in services trade, which has been providing a surplus of some 1.5 percent of the gross domestic product (GDP) over the last few years,” she said.
The economist pointed out the government’s ambitious infrastructure program will likely keep imports growing strong.
The Duterte administration targets to ramp up spending on infrastructure to P1.83 trillion, education and training to P1.27 trillion, health to P272 billion and social protection, welfare and job generation for the poorest of the poor to P509 billion by 2022.